Introduction: Background, Functions and Criteria

The following contract completion report identifies structural options for creating a Land Interest Holding Entity (LIHE) for the Platte River Recovery Implementation Program. One of the Program's objectives is to protect or restore 10,000 acres of habitat along an approximately 80 mile stretch of the Central Platte River between Lexington and Chapman, Nebraska in the first thirteen years. The long term objective is to protect or restore approximately 29,000 acres of suitable habitat along this stretch of river.

As part of the contract to produce the Land Entity White Paper, Conservation Partners, Inc. was asked to explore more fully the structural options identified in the White Paper. The process to produce this report included: discussions and contacts with numerous nonprofit organizations and government programs around the country that were identified as potential models or candidate land entities, discussions and contract work with legal experts knowledgeable about corporate, trust and multi-jurisdictional structural options, discussions with the Nebraska Community Foundation and trust advisors about these options and reporting to the Governance Committee as these options were being explored for their input. The purpose of this report is to define these options and the pros and cons of each, so that the Governance Committee can make an informed decision on the most appropriate way to proceed.

The functions that the LIHE would perform are primarily as a holder ("custodian") or land bank for the interests in land which will be acquired with Program funds and include the following:

These functions are primarily ministerial in nature, as opposed to substantive decision-making, and require the LIHE to act as the agent of the Governance Committee. The following criteria have been identified as important for the evaluation of the various alternative structures for the LIHE:

2. Recognize the trade-offs between existing organizations and creating a new organization.

• New entities may require formal federal/state approval (federal agencies cannot create a corporation to carry out their functions without specific authority).
• There is great flexibility in contracting with existing organizations.
• New organizations involve risks and benefits. On one hand they can be risky and costly, requiring establishing a governance structure and hiring new personnel. On the other hand they can be tailored to fit the job.
• Existing organizations involve risks and benefits. On one hand they have existing staff, operations and governance and may be very cost effective. On the other hand, their missions, operating structure and style must be compatible.

3. The entity must be fully accountable to Program signatories

4. Actions required to implement the land component should be as straight forward as possible, i.e. avoid complexity.

5. Solutions should be cost effective.

6. The likelihood of success should outweigh potential risks.

7. The land holding entity should be able to work cooperatively with adjacent landowners and local communities.

At its August 3, 2000 meeting, the Governance Committee reviewed a range of structural options from four different categories. These categories consisted of the following:

Organizations

2. Use an Existing National Nonprofit Organization

3. Establish a New Nonprofit Organization

4. Intergovernmental and Multi-Jurisdictional Options

Discussion of these options indicated a desire to focus efforts on two of these options, either using an existing national nonprofit organization or establishing a new nonprofit organization. Research of these options has identified the following feasible options for each category:

A. Use an Existing National Nonprofit Entity

B. Establish a New Nonprofit Entity

The following sections identify the pros and cons of each of these options and the final section summarizes considerations affecting this range of choices.

A. Existing National Nonprofit Entity Options

1. Use the Center for Natural Lands Management (CNLM)

The Center for Natural Lands Management (CNLM) is a California based conservation and land management organization focusing on the perpetual management of special open land resources to maintain and restore natural resource values. CNLM is unique in that it focuses on taking ownership of properties that have important habitat and natural values and managing and enhancing them over the long term to preserve these values. CNLM has developed a PAR analysis software program to assist them in determining long term management and restoration costs for these lands. CNLM generally receives a sizable endowment at the time that lands are transferred to its ownership capable of generating annual funds sufficient to cover the estimated costs of management of these lands.

CNLM is primarily a land management organization and its activities are currently focused on California and west coast states. At present the high demand for CNLM services is putting pressure on its organizational capacity to respond. Although CNLM is interested in performing land entity functions, its primary focus is on managing lands as opposed to holding title and the other custodial functions that are anticipated for the land entity. CNLM can handle these custodial functions, but prefers to utilize its expertise and capabilities for long term natural lands management.

CNLM derives the majority of its revenues from the land management services that it performs for the lands under its long term care. Most of these funds are derived from endowments that are established at the time that lands are transferred to CNLM. In addition, CNLM obtains donations and grants to its cause, although these typically do not comprise major sources of support.

Advantages

2. CNLM has great personnel and understanding of management issues for special natural areas.

3. No federal legislation would be required to use an existing nonprofit entity.

Disadvantages

2. CNLM is primarily a west coast organization which does not have experience in land issues in Nebraska or the mid-west. Its services are in great demand and it is unclear whether it has the organizational capacity to manage the Platte River land entity functions.

3. Overhead for establishing a presence in Nebraska may be higher than for a currently operating, local organization or for other organizations with nearer offices. In addition, CNLM generally requires an endowment sufficient to generate funds to cover the annual costs of management at the time that it takes ownership of land.

4. As a non-profit corporation with an independent board of directors, CNLM's mission may not always mesh with the objectives of the signatories.

 

2. Use the National Fish and Wildlife Foundation (NFWF)

NFWF is a fifteen year old, publicly chartered non-profit corporation dedicated to the conservation of fish, wildlife, plants and their habitats through forging partnerships between public and private sectors. NFWF often serves as an implementation entity for protection of important habitat involving federal, state and local interests. For organizational purposes, NFWF falls within the Department of the Interior (DOI), though it is an independent entity that does not receive directions from any part of DOI, and does not report to the Secretary of Interior except as one of the directors on its board. Appropriations of federal funds to an existing federal corporation, such as NFWF, is routine and would require no greater legislative action than budget approval in the appropriating process. The U.S. Fish and Wildlife Service is specifically empowered to fund projects involving interdepartmental, intergovernmental and public/private cooperation through the NFWF.

NFWF is capable of contracting to take on a variety of roles from simply holding interests in land, to operating as a fiduciary agent and managing money flows, to active project management and coordination. NFWF would use a program manager from one of its regional offices to manage land entity functions and has access to excellent real estate, appraisal and due diligence assessment capabilities. It has performed all of the land entity functions for other projects, although not on a long term basis. NFWF would negotiate a contract, scope of services and fee schedule with the Governance Committee to carry out specific activities. It would prefer to do one trial transaction on a time and materials basis in order to determine an accurate assessment of costs. Based on that test case, a longer term relationship could be structured which would be based on operational experience and real costs. Traditionally, NFWF is a transitional holder of real estate, but is increasingly holding properties for longer time periods, particularly for special habitat lands. It is restricted from engaging in either advocacy or litigation. It has a great deal of experience in working with local communities, non-profit land conservation organizations and land management and restoration organizations, and has experience raising funds from other sources to enhance project funding.

According to its 1999 financial report, NFWF received over $28 million in private, foundation, corporate and non-governmental organization support during 1999, accounting for 45% of its total revenues. NFWF has the ability to set up distinct projects largely directed by third parties which are involved in programs related to its mission of habitat protection and management. The direction of these projects can be accomplished through a project board of directors or contact group specified by agreement. Specific direction with regard to acquisition and disposition of parcels can be accomplished through an operating agreement with NFWF.

Advantages

2. NFWF is a respected partner with federal and state governments and has experience in accomplishing land entity tasks.

3. NFWF understands land protection, rural communities, management and restoration issues and has a history of success.

4. NFWF has experience with complex real estate transactions, flexible agreements and in managing liabilities.

5. Liability concerns are limited by the applicability of federal tort claims limits.

6. NFWF can engage in fundraising activities to supplement government funds.

Disadvantages

2. NFWF is a national and regional foundation which would run the project out of a field office in either the mid-west or south-west (although there are plans to open a Denver office). If there is not a Denver office, overhead for this management structure may be higher than for a currently operating, local organization.

3. As a non-profit corporation with an independent board of directors, NFWF's mission may not always mesh with the interests of the signatories.

 

3. Use the Trust for Public Lands (TPL)

The Trust for Public Lands is a national land conservation organization that works to protect land for the public to enjoy as parks and open space. Founded in 1972, TPL offers a range of skills and services to help landowners, citizen groups and government agencies protect land. TPL has often served in a bridge-financing capacity and as an interim land holder to acquire important private lands for public ownership. TPL has extensive real estate, negotiation and transaction skills. Generally, TPL is not a long term holder of land but is moving to consider longer term arrangements. TPL will consider operating as the land entity if a mutually agreeable management contract can be negotiated. They caution that covering liabilities and contingencies may involve substantial costs. The project would be managed out of the Colorado project office where Doug Robotham is the current executive director. Doug was very involved in the Cooperative Agreement when he worked for the Colorado Department of Natural Resources and is knowledgeable about many of the land issues. While there is interest in performing the land entity functions, TPL acknowledges that it has little operational history in long term ownership of land.

In the past few years, TPL's fundraising capabilities related to projects and general operating support have increased dramatically. In 1999, TPL received over $65 million in restricted grants from a variety of private, public, corporate and foundation sources. At the same time it received over $8 million in unrestricted grants from these sources. It has the capacity to raise additional funds to support projects in which it is engaged.

Advantages

2. TPL is a large national organization with great skills and capacity and has contracted with governmental entities to perform real estate functions for years.

3. Doug Robotham is the current director of the Colorado office, with broad experience in Platte River issues and a desire to assist the process.

4. TPL has substantial fundraising capabilities which could enhance Program funds.

5. No federal legislation would be required to use an existing nonprofit entity.

Disadvantages

2. With a large staff and established constituencies it is unclear how responsive TPL could be to the set of issues raised by the land entity and holding of habitat lands.

3. Overhead for establishing a regional presence may be higher than for a currently operating, local organization.

4. As a non-profit corporation with an independent board of directors, TPL's mission may not always mesh with the objectives of the signatories.

 

4. Use The Conservation Fund

The Conservation Fund is a national nonprofit conservation organization which forges partnerships to protect America's land and water resources. Through land acquisition, community initiatives and leadership training, the Fund and its partners utilize creative solutions emphasizing the integration of economic and environmental goals. Since its inception in 1985, the Fund and its partners have protected over 2.2 million acres of land across the country, including over 500,000 acres in 1999 alone.

The Fund has regional offices in Boulder Colorado and Chicago which could service the land entity needs in Nebraska. Traditionally, the Fund has operated primarily as a negotiator and deal maker to bring private land into public ownership. It has not been the long term owner or manager of land. It is willing to consider performing land entity functions and would negotiate a management agreement or contract to perform an agreed upon set of services. Most likely this project would initially be staffed out of the regional offices where there are excellent land transaction people. Both Sydney Macy in Colorado and Peg Kohring in Chicago have excellent transaction skills and ability to work with diverse landowners to achieve conservation objectives.

The Conservation Fund has been growing rapidly and is supported by a variety of sources in addition to income earned from projects. Grants from charitable foundations for operations and projects totaled over $10 million in 1999. In addition, individuals contributed $4 million and over 200 corporations made grants totaling in excess of $50 million. In 1999, The Conservation Fund was included in the Philanthropy 400 list of leading nonprofit organizations in the United States.

Advantages

2. The Fund is a large national organization with great skills and capacity and has contracted with governmental entities to perform real estate functions for years.

3. Regional personnel are skilled in real estate transactions.

4. The Conservation Fund has substantial fundraising capabilities which could enhance Program funds.

5. No federal legislation is required to use a pre-existing entity such as The Conservation Fund.

Disadvantages

2. Overhead for establishing a regional presence may be higher than for a currently operating, local organization.

3. As a non-profit corporation with an independent board of directors, The Fund may have less direct accountability to the federal and state parties.

 

B. Establishing a New Nonprofit Entity

1. Create a New Non-Profit Corporation or Land Trust

A new non-profit entity could be established as the Land Interest Holding Entity. Such an organization would be established under Nebraska law and incorporated as a federal, tax-exempt entity for the purpose of implementing the land protection agenda of the Program. The non-profit corporation would contract with the Governance Committee to perform the specific land ownership negotiation and holding tasks. There are many models of nonprofit land trusts operating throughout the mid-west and west which perform the real estate functions anticipated for the land entity. The Colorado Cattlemen's Agricultural Land Trust is an example of an entity which provides land conservation services to traditional agricultural landowners in a user friendly fashion. The experience of these groups as well as that of the Land Trust Alliance (LTA), the national association which represents over 1,200 land conservation organizations, could be harnessed to create a new nonprofit tailored to the purposes of the land entity.

Advantages

2. Can be structured to involve federal and state representatives on the Board as well as other stakeholders if desired.

3. Has the ability to partner with many other groups and organizations, draw upon the experience of many successful land trusts and can raise funds from charitable, public and foundation contributions to supplement government funds.

4. No history or preconceived notions to overcome.

Disadvantages

2. Creates a new nonprofit where there are already several and which has no operational history, governance structure or staff. It's capabilities may overlap with a number of the existing non-profits.

3. As an independent non-profit corporation it has less direct accountability to the federal and state parties.

4. May be more risky and less predictable than working with an existing, known entity.

 

2. Establish a New Federal Public Corporation

A new federally chartered non-profit corporation, similar to NFWF or the Presidio Trust, could be created. Such an effort would require federal authorizing legislation, but could create an entity tailored to the specific circumstances of the Platte River Recovery Implementation Program. A board of directors could govern the new federal public corporation with representative membership and appointment procedures tailored to the Program. A contract between the new corporation and the Program signatories could assign the corporation whatever role is desired, including holding interests in land, negotiating land deals, managing land, and contracting with other organizations to accomplish implementation objectives.

Advantages

2. Could have a single purpose orientation

3. Could be constructed to have significant local involvement if desired.

4. No history or preconceived notions to overcome

5. Federal and state agencies have a history of working with this type of organization.

6. Can engage in fundraising activities to supplement government funds.

7. Liability issues can be addressed legislatively.

Disadvantages

2. A new organization has no staff, operating history or relationships with other conservation or management organizations.

3. The relationship to the federal government may invite suspicion that federal goals will be given greater weight than concerns of other participants.

4. May be more risky and less predictable than working with an existing, known entity.

 

3. Create a Nonprofit Subsidiary or Supporting Foundation of the

Nebraska Community Foundation or Other Nonprofit

A new Nebraska nonprofit corporation could be established as a "subsidiary" (or, more precisely, a controlled affiliate) of the Nebraska Community Foundation. The sole purposes of this entity would be to hold interests in land and the other functions of the LIHE. This entity would be a tax-exempt 501(c)(3) or 509 (a)(3) charity that is not a private foundation, because it would be a supporting organization of all four program signatories (i.e., Colorado, Nebraska, Wyoming and the Department of the Interior) and the Nebraska Community Foundation. The board of this new entity would be appointed by the Nebraska Community Foundation, with the approval of the four program signatories. A supporting foundation under the Nebraska Community Foundation umbrella could be an efficient way to utilize the infrastructure of the Community Foundation.